Deconstructing baseload. It is the title of a chapter in a recent report from REN21, the global renewable energy agency, highlighting just how dramatic the energy transition will be as the cost of wind and solar continue to fall, and storage continues its rapid adoption.

Until just a few years ago, most of the world’s electricity grids looked something like this (above), a whole lot of inflexible baseload (could be coal, nuclear or even hydro in some countries), backed up by intermediate and dispatchable generation and peaking plant (both mostly gas).

That’s now changing. In this “conceptual progression” from the Baseload Paradigm to a New Paradigm of 100% Renewable Electricity, REN21 outlines the key steps that are taking place and will take place.

In the early years of variable renewable generation, minor changes are made in the operation of country and state grids, including developing forecasting systems for renewable energy production, introducing improved control technology and operating procedures for efficient scheduling and dispatch.

Australia, like many other countries, is somewhere along this path – not so far in the still coal-dominated states like NSW and Queensland, but quite far in states like South Australia, already sourcing some 50 per cent its supply from wind and solar, and increasing rapidly.

(These graphs are a global average, so it is not entirely indicative of what will happen in Australia, given its excellent wind and solar resources and its geographic diversity. Nor does it take into account Australia’s own demand patterns – we’d likely see a demand trough around midday).

The later stages of the progression towards fully renewable power systems, REN21 says, will be marked by the integration of variable renewable power into the system by advanced forecasting, grid reinforcements, strengthened interconnections, and improved information.

This will come with controlled technologies, the widespread adoption of storage technologies, greater focus on energy efficiency and demand response, and the coupling of the heating and cooling and transport sectors.

In short, the latter spells the electrification of most things. It is interesting to note that Australia’s energy institutions, particularly the market operator, see the need for a similar portfolio of resources.

The graph above illustrates the need for storage to deal with over-production and to time-shift to meet peak demand periods, as well as the need for “dispatchable” resources.

Interestingly, these dispatchable resources are probably required less often and in lower quantities than in a “baseload” system, except of course in periods where the supply of wind and solar is short.

Which brings us to the final graph of this short presentation, and the basket of tools necessary for this energy transition.

Most of them are exactly what is being adopted and proposed for Australia’s energy system, particularly in South Australia which is installing batteries, and proposing longer term storage options such as solar thermal, pumped hydro, and hydrogen fuel.

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

41 Comments

Sir Pete o Possums Reek 1 year ago

Thankyou Giles. (once again) Nicely deconstructed so that now I may metally reconstruct it

at a walk through.

Andrew Want 1 year ago

In 2011 AUSTELA (the Australian Solar Thermal Energy Association) wrote in its submission to AMEO’s National Transmission Netowork Development plan “AUSTELA urges AEMO, in the design of the 2011 and subsequent NTNDP modeling and analyses, to develop tools enabling analysis of the economic benefits of … energy storage and dispatchability…’.

AUSTELA’s 2012 submission to AMEO noted “… just as the 2012 NTNDP is intended to address the increasing interaction of gas and electricity markets …, the 2012 and future NTNDPs must develop more sophisticated modelling capability that allows the impact and value of large-scale energy storage to be incorporated into future network development scenarios.”

It is encouraging that, though 7 largely lost years later, energy storage is now finally part of mainstream debate in relation to Australia’s future energy system.

Eric 1 year ago

This seems fairly logical. But what interests me is how the costs of the transition are managed while we still need the fossil fuel generators. If we flood the system with cheap renewable on windy sunny days coal plants will become uneconomic very quickly. Surely the government has to step in and subsidize the coal plants while we manage the transition. Or if not, then the system has to wear the cost through a NEG type mechanism.

One thing is for sure coal fired power plants are going to be uneconomic very soon. That is a very good thing but we need to manage that tricky interim period while enough renewable and storage is built out.

Mike Shackleton 1 year ago

Better not to subsidise the outgoing technology. Subsidies are meant to provide a multiplying effect, not prop up a failing technology. Instead, put the subsidies into the technologies that can take advantage of periods of excess production (ie. grid scale storage). Or, allow all electricity users the option to purchase electricity based on market rates. If you as a home energy user knew you could set a battery to charge whenever the price dropped to a few cents a kWh you’d have an incentive to buy a battery.

As stated in other articles, there is so much that can be done by just changing the market rules to match currently available tech, it’s not necessarily a case of throwing money at the problem.

Eric 1 year ago

Coal fired power stations are business’s owned by shareholders. If they don’t make a profit they will turn off the power. If renewable energy makes the business unprofitable they will have to be paid by someone to remain open, if there is not enough power in the system to supply electricity needs. That payment is a subsidy whether we like it or not.

I’m interested in how that works and who pays for it. Do we just pay the coal plant direct or do we distribute the costs through the retail price of electricity?

brucelee 1 year ago

Its a great point, I think rather than having a standing subsidy aka UK capacity payments, it should be handled on a case by case basis. i.e once an operator declares a coal plant uneconomic and intent to shut it down, the government can step in and fund/subsidise the SHORTEST possible interim period that ensures any supply issues are neutralised by new firm renewable development. On current renewable development timelines this should be no more that 3yrs.

Eric 1 year ago

We have no system here other than we keep paying more for energy!

RobertO 1 year ago

Hi Eric, A couple of points to note. 1 Power stations in the NEM are all separated in location and as such they all have different running costs (some have cheap water, some have local coal mines to supply fuel, some have contracts with State Government or are even run by State Gov Qld comes to mind. 2 Some Coal power stations are owned and operated by companies that retail electrical to consumers, some they have the ability to hide the losses in one section under the general profits of the company overall. 3 All coal power stations will suffer from cheap solar in the middle of a sunny day but it’s their running costs and selling costs over whatever accounting period they use that dictates if they are making a profit (just cause they run at a loss for some periods does not make them unprofitable overall. 4 AEMO has the power to direct power station to keep running. They often use that power in SA to keep the system stable using Gas Generators.

So what does this mean for us consumers? Possible outcomes are higher prices for the next 4 years (I told my bosses in May 2017 that I though a 10% year on year for 5 years was my thoughts despite more RE coming on line at prices that are 50% cheaper that the current coal price in NSW, If I read correctly there are 15000 MW of unserved RE in NSW today as they have no access to lines or access to lines that are full already with capacity. All coal power station will not leave the system on one day and given that we have both existing other coal and other gas generators, it will at this time be a disorderly change over to RE. With Solar + Wind this will make power station unprofitable for only parts of the day so they may continue to operate, but the moment you add Solar + Wind + Storage allowing for their respective capacity factors you will see Coal power retire, it will be one power station at a time, even if the Solar or wind or storage are in different states (provided the interconnects can handle the traffic required. It best if they are all in the same state but Tas is primed to become the “Battery of the Nation” project but it looks like they will need another interconnect to do it. Yes it cheaper to build locally but reliability of supply of RE comes with wider distribution base. So possible outcomes are more wind in Tas and more solar in Qld and often more local storage in smaller sizes but Snowy 2 is centralised. If they build Bass Link 2 the security of supply in Tas goes up, but if you change the pathway to include King Island then there is a community benefit for King Island (they get Optical Fibre (OP) for a price of about $200 000 compared to a standalone OP system of $10,000,000 or more. To me there is no one right answer but one very wrong answer, “We do not need a plan to change over to RE.

And Transport add it 2 cents worth as well which is why we need a plan. Watch out for AEMO Integrated System Plan

Eric 1 year ago

Thankyou for that well thought out answer. A plan is what we need for sure and this government has really done a lot of damage in the absense of one. I think the energy wars are only going to become more intense now that the oil industry stands to go bust with the rapid rollout of electric cars in China and elsewhere. So I expect the Lib/Nats position to harden even if they lose the next election.

I have a lot of faith in Audrey at AEMO. So I look forward to watching how they manage this. A second Basslink through King Island would make a lot of sense. They could then build that wind farm down there that was put on the back burner. They are sitting on the best located wind resource in the country, they just need a power connection.

RobertO 1 year ago

Hi Eric, I have one suspicion about 2 Toungs and his position on RE in the COALition. I believe that he will turn 180 degrees just before the next election and that he will turn on Baabbott (following his words on the book launch of his bestie Pauliney Handson about how he is still the best person to lead the COALition after the election and that they need to do a preference deal to keep power in the COALition).

Eric 1 year ago

That is hardly going to save him. If he wants to do renewable energy a favor he should go down at the next election loudly proclaiming the virtues of coal power. Then we can say, you lost, go away and rethink your position. Otherwise, If the Libs lose, they will dump it all on Mal and his left leaning renewable energy anti coal ideas. And we will be back to square one, with Abbott/other right wind looney, in opposition ready to wreck the joint again.

Ian 1 year ago

Renewables make baseload generators unprofitable by eroding into their market for only some of the time. In an electricity market, for all intents and purposes, there is very little storage, what is generated must be used there and then. Take a small proportion of demand from a coal generator’s market and their profitability is compromised. Solar, once it starts eroding into that baseload profile ( the dark gray in graph a) it spells financial ruin to coal. Storage is the method to restore a flat line baseload for coal. If you want to subsidise tired old coal stations, subsidise storage these are the crutches to keep the old limpers going.

The second issue with geriatric coal stations is their heat fatigue issues. Solar is the best way to care for these old darlings. We know that solar is best produced when the sun is brightest, the sky cloudless and the days very hot. Solar’s generating profile very closely matches the demand for air conditioning and human daytime activities. So, if you want to support coal then you need to install adequate solar. Subsidy on solar is a subsidy for coal.

Recent experience has demonstrated that coal power plants fail in the heat of summer. You have two choices here, 1. Retire these plants early and build other generating capacity or spend big on refurbishing these to restore reliability. 2. Accept coal outages and reduced reliability due to age and subsidise very cheap wind and solar, storage and interconnectors to spread the reliability issues so that coal can still contribute in a profitable fashion at its own arthritic pace.

Eric 1 year ago

Coal plants are dead. That is why Adani is dead. I’m more concerned with how we manage that very tricky transition without paying exorbitant prices for electricity.

jm 1 year ago

Coal plants are only dead if they don’t get subsidies, and if renewables don’t get bound up in expensive regulations.

just this morning, Coalition MPs are demanding that Liddle be nationalized, even though it is unworkable and full of brain eating bacteria…. this is not satire.

Calamity_Jean 1 year ago

Brain eating bacteria?

jm 1 year ago

So I have read….

Calamity_Jean 1 year ago

Ick.

jm 1 year ago

Sorry brain eating amoeba. The story is that the power station uses a local lake for cooling, instead of cooling towers. The lake now carries a brain-eating amoeba called naegleria fowleri, which is thought to be nurtured by artificially warmed waters.

Now I understand! That’s the one that gets into its victims’ brains through their noses, right? If a person gets amoeba-infested water up his/her nose, the amoeba eats its way through the sinuses into the brain. What a terrible way to die.

Robert Engle 1 year ago

You are already paying exorbitant prices for electricity. Move faster towards the future to eliminate this, don’t put a shackle on to slow things down.

solarguy 1 year ago

AGL is a business owned by shareholders is it not? AGL is investing, i.e. they are building or buying wind and solar generation now, so that as the turbines at Liddell are decommissioned (staged) they will be producing power from RE until all turbines are decommissioned. No power will be turned off, so the shareholders happy.

AGL has had the foresight and others need to do the same, simple. Only dumb companies will wait until RE makes them unprofitable. If their boards and shareholders don’t see the light, then their business will collapse. But it just doesn’t have be that way does it.

Are you getting the big picture now.

Eric 1 year ago

No, I’m not getting it.

AGL is managing the output from generators to maximize value to shareholders. That is what they do! Once they have built just enough renewable and gas they can retire the coal plant which will create a shortage driving up prices and maximizing profits from their new assets.

They don’t give a s..t whether the grid goes down. It’s just about maximizing returns for shareholders.

Is anyone managing this situation on the national grid? No they are not!

Basically, it’s the law of the jungle. And we are all paying a terrible price!

solarguy 1 year ago

When they have enough renewables they won’t have a shortage WTF are you on about.

Look, just find a comfy chair, crack open a beer and think for a while. If you still don’t get it repeat the former, but if you end up pissed, you were never going to get it.

Eric 1 year ago

You need to get off your high horse.

We are already seeing the price of electricity sky rocket in Victoria since the closure of Hazelwood, its putting upward pressure on prices in other States too. And the Victorian Labor government is not rolling out renewable anywhere near fast enough and that will get worse if the Libs get in. AGL will use the market leverage it has in Fossil to milk prices. It’s good that AGL are transitioning but there is no mechanism to bring down prices because the role out of renewable has been slowed by the coalition and there is no policy. Leaving fossil generators with all the clout.

solarguy 1 year ago

There is only one thing you can do to fight the greedy now private owned gentailers and that is to do what I and others have done. Get solar and battery, you will be in a win, win situation then. I’ve beaten the bastards at their own game, I don’t pay them a cent, they pay me. I’m always in credit, the last time for $128, before that $210 and I have had all my a/c running if needed during the day. Now, you may not be able to afford as big a system as I have, but you will be self sufficient a good proportion of the time.

“Ahh, back in the saddle again”

Eric 1 year ago

I’ve got solar but we are stuck on the 66 cent feed in. If we change the system we lose it. But that benefit has faded in our circumstances. I understand what you are saying and we will be totally upgrading or system to a much larger solar with battery. There is no other option.

solarguy 1 year ago

What state are you in Eric?

Eric 1 year ago

Vic

solarguy 1 year ago

Ok, you have six years left to go. Have you been squireling any of the FIT away into an account to help fund the new system?

You may find that a year or so before the end of the scheme it might be better to implement the new plan perhaps.

Eric 1 year ago

If I didn’t have such a big family in an old house I would agree. We only have 1kw system. We also have a solar hot water system that is very good. The numbers are looking pretty good at the moment for a large investment. But that is across the board including double glazing etc. But you may be right later when you include the unknown but likely large reduction in solar and battery units in 5 years time. I was thinking of going off grid totally around that time.

solarguy 1 year ago

Going off grid is a big step, I designed my system to do just that, but I stayed connected for one reason only, “FIT” as it pays me to do that and it might just for you too.

Ian 1 year ago

The turnaround time for sod-ready wind and solar is only about 2 years, there are already many projects rearing to go. Although coal power stations are massive, they are not so massive, that the closure of a single plant, like Liddell will shut down all coal generating capacity. Liddell at 2000MW represents 15% of NSW’s peak consumption. This particular plant is becoming a burden to its owners. The other plants are reaching retirement status, so without much ado, the energy transition,ie removal of FF from the generator mix, could happen quite naturally.

Talking about money for the role-out of battery storage. Given the electricity consumption in NSW is 75 TWh a year , assuming a spend of 1.5c/kWh, how much money is available for storage a year? 75 billion kWh x 1.5c/kWh = $1.125billion dollars. Each and every year!

Let’s dream a bit: what would it take to get people to buy storage? Get the price down to $500/kWh, not enough? Say $300/kWh ie powerwall 2 @14kWh =$4200. As mister average would I buy this fully installed at this price? Absolutely, give me two of them. For this to occur you’d need about $8000 subsidy . In year 1 =140 000 unit market for the likes of Tesla. Musk would put one of his falcon heavies under his workforce to get this achieved! Year 2 market players like LG will be salivating at the door like hungry wolves, the price of batteries would drop , the cost of the subsidy could drop to $6000 per “power wall equivalent” ie 187 000 unit market. The bigger the pot the more the players will want to join. You could design this driver of the storage market to last 5 years with some sort of regression in the size of the subsidy $8000, to $6000 to $4000 to $2000 to $1000 per PWE. Is the $8000/PWE worth it in the short term ? 2GWh of storage . If a big market encourages competition and price reductions as we anticipate , the year 1 subsidy will buy the year 2 price reductions ie $2000/PWE or 187000-140000= 47 000 PWE = 658MWh, the benefit would continue: year 3, 90 000 units could be directly attributed to starting the subsidy a year earlier 1.26GWh: in just 3 years our original subsidy would buy about 4GWh of behind the meter storage , (and probably a whole lot of new solar rooftops, but that’s just a sweetener, and besides this point) ie $1.125 billion buys 4GWh of storage = $280/kWh. Take this thinking through to the end of this 5 year plan and you will see that the storage size of the 1st year’s subsidy expenditure will keep accumulating , just by kickstarting a home battery market.

A couple of points: a home battery subsidy is primarily to build a supply chain rapidly that can drive down costs of storage for the near term future. It’s not to help the poor directly and instantly, it’s not to provide a set amount of storage capacity only. It’s just a sign to say we are open for the storage business. If $5.6 billion can reduce battery prices from over $1000/kWh to $100/kWh in 5 years then even the poor and down-trodden like Tomago smelter could afford plentiful storage.

solarguy 1 year ago

I think the best way around that problem is staged (planned) shutdown and decommissioning of FF plant as RE capacity is ready to take over.

Eric 1 year ago

That will require some sort of payment to existing owners to cover lost revenue.

solarguy 1 year ago

No not at all. Any business who can’t be sustainable financially shouldn’t get any payment for BAU, but the could get finance to help shift their portfolio to RE from the banks.

Eric 1 year ago

That’s a payment!

solarguy 1 year ago

Loans are to be paid back, get the difference!

RobertO 1 year ago

Hi Eric, solarguy is right, if we have a plan we will be able to manage the shut down better than if we have no plan. Finkel said 3 years notice so enact laws with some teeth to enforce the law. As we build RE we will put pressure on all but some will feel the pressure more that others and hence some will leave earlier that others. Just solar or just wind is not enough to cause coal to retire, we need storage built at the same time (it already happening within the NEM). Note that solar+ wind + storage do not need to be in the same state (better if they are) and improved interconnects will also help. Say BASSLINK 2 is built and Hydro Tassie change all the hydro dams (that can be change) from gravity run 24/7 to peaking Hydro run only only 4 hr in morning and 8 hr in afternoon you have made a massive battery and add more wind, you may even need a third BASSLINK 3. More that anything we need a proper plan that is also adjustable to where we need to go (the what, the where, and the how,). I do not want capacity payments because that will extend the life of FF and Demand Management (DM) if propertly used has lots of potentical (could be up to 10% of our max demand needed) How many air conditioners are there in the NEM that are 5 Kw or more that could have the power turned down by 20% on high demand peaks (all done by software in the control of the compressor motor and the user need not do anything, it still works and still provides airconditioning as needed). WA introduced it in 2001 and it’s been working ever since and I suspect that all units sold in Australia may already be DM enabled (just incase the unit was sold in WA where it was law)

Ray Miller 1 year ago

Yes the transition should be planned, but considering the major advantage the current market rules have given (and still giving) the existing centralised plants no further advantage needs to be given. The surprising thing to me is the lack of investment by “most” of the existing players in the transition, the only thing they have invested in is resisting the transition, so go figure. One would have though to get in at the ground floor and set their business up for the future would have been highly desirable. But in Australia our energy businesses are just dumb and lazy, just want handouts and lower tax rates without doing any work. Certainly in Queensland we have had a few individuals in Energy companies with some future insight but they were extinguished by political agendas. In hindsight a major costly mistake we all will be paying for many decades into the future one way or another. I have no problem throwing any Luddite under the bus if they get on the road, problem is they seem to be lining up, we may need a larger bus!

Eric 1 year ago

There is a reason they have been slow on the uptake, it’s called milking the system. When you are the prime generating assets you have a lot of clout.

As has been pointed out here the arrival of battery storage has upset the apple cart. And probably goes a long way in understanding why the Libs have been so vehemently hostile to the Tesla big battery. It represents the end of the fossil fuel paradigm.

Apart from Audrey at AEMO there deosn’t appear to be anyone with clout developing credible policies. The NEG is a thought bubble, which might have some good points but it hasn’t been explained to the public in any sort of credible detail, the process is hidden from view.

As for Labor opposition we can assume they will be more friendly to renewable, but we need more clarity around their actual polices. And they won’t be implemented without a friendly majority in the senate, which appears to be dim prospect these days.